May 06, 2007
Aid to Africa
An interesting statistic, don't you think?
The productivity increase that resulted from $187 billion's worth of aid going on "public investment" in 22 African countries between 1970 and 1994 is a very precise figure: zero. The Ajaojuta steel mill in Nigeria helps to explain why so much produced so little. The Ajaojuta project began in 1979. Nearly 30 years and more than $5 billion later, it has yet to produce a single bar of steel.
To the objection that a huge portion of aid disappears into the pockets of corrupt officials, Sachs's reply was that corruption is not Africa's main problem. Yet capital flight from Africa increases in direct proportion as aid to the continent goes up: $94 billion left sub-Sarahan Africa for Swiss bank accounts in 2004. That amount leapt to an incredible $150 billion in 2005.
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"Interesting" in the sense of "probably made up". Those numbers are substantially larger than the total capital account of Switzerland and no source is given; the largest estimate I'd seen was of about USD196bn for the total period 1970-98.
Oh yeh and the Ajaokuta (not Ajaojuta) steel mill has been producing steel for three years now; it is part of the Mittal group.
Tim adds: Mittal thus showing that what is needed is FDI not aid, presumably, and as for the capital flight figures...doesn't Easterly say they're larger than Aid?
Posted by: dsquared | May 6, 2007 4:32:34 PM